Month: December 2014

College is thought to provide opportunities for graduates not available to those not pursuing higher education. However, the increases in the price of college and the decline in wages for those with degrees are making people question the importance of college and if it really is worth the investment.

Mary Beth Marklein argues that a college degree is still worth the investment. One point was that college graduates, whether they earn a bachelor’s degree or an associates degree, will still tend to earn more money over their lifetime versus those who do not go to college, information found based on 4 decades of analysis. And even though wages have declined for those who have earned college degrees, they have also declined for those who did not receive a college education, and the gap between the two is still at an all time high, with those people who earned college degrees earning much more money in their occupations.

Another point made was that even though student loan debt has soared by the end of 2013, a federal reserve study on data of wages for ages 16-64 for those without a degree, with an associates, and with a bachelors had shown that those with a bachelors degree have kept a return on investment of 15%, where 7% return is sound. This proves that even with student debt rising, the return on investment proves the investment is definitely worth it. Majors were also found to play a role on the returns of investment, where some majors can earn a return of 21%.

Some facts stated in the article were that over 4 decades, a bachelors degree will earn an average of about 56% more than a high school diploma and an associates will earn 21% more. However, studies have shown that the earnings of bachelors and associates degrees over high school diplomas has decreased from where they were in the years 1982-2001 to 2001-2013. Along with this statistic, the wages have declined over these same time spans. So the question is, even though those with a bachelors or associates degree do tend to make more money, is this decline in wage and earnings a permanent reversal in the demand of college graduate’s skills, or is it just a phase that will pass?

The costs of tuition and fees to attend college have been rapidly increasing for years, even decades, but this increase may be slowing according to data from recent years. This news comes as a relief to students and families who are struggling to find ways to make the investment in paying for a college education. However, even though the increase in sticker price to attend college is slowing, there is a rise in what students are actually paying when you subtract the financial aid they receive.

Although even in the most recent years tuition and fees are still going up from year to year, the rise is much smaller than in the growth in past years. Both public and private four-year institutions have seen the effects of the slow in the rise of the sticker price to attend in the past year because they have both seen the smallest one-year percentage increase of the tuition and fees in decades. However, the net prices of what students and families actually pay to attend college minus all of the forms of financial aid they receive have been increasing more and more in recent years because the growth in financial aid has not been keeping up with the increase in tuition prices.

The average net price that students and families paid was actually much lower at the height of the recession than it is now when some families are still trying to recover from the recession because there is no longer a rapid increase, but a decline in the amount of grant aid supplied by states and the federal government while tuition and fees prices are still going up each year. Some families are able to pay for a postsecondary education with no problem, but many students and families nowadays rely on subsides to pay for a college education. Although financial aid is obviously still present, it is no longer increasing by any substantial amount like it was in previous years during the recession.

Pushing for more financial aid from the states and federal government may not be the answer though, because it will only temporarily bail families out since the net prices of colleges are still likely to increase from year to year. The real problem that needs to be addressed is for college leaders and policymakers to evaluate what it really costs to supply a college education, and how to overall sticker price, therefore lowering the net price for students and families.